Case Overview
The plaintiff is a well-known American clothing manufacturer and retailer with the "CHAMPION" brand, which has a history of over 100 years and enjoys high recognition both in China and globally. The brand began opening physical stores in China in 2017. Due to collaborations and endorsements by celebrities, the brand saw a surge in popularity in China in 2018, becoming a trendy label. This surge also attracted a significant number of copycat imitations in China.
The defendants are a family-run group of enterprises based in Fujian. Since November 2017, they have been engaging in trademark squatting around the Champion brand, repeatedly registering pirated trademarks in various categories:
At first glance, these trademarks did not seem similar to the plaintiff's registered trademarks for the Champion. However, the defendants altered their actual use, emphasizing the "graphic" part and closely mimicking the plaintiff's trademarks in usage method, placement, and overall commercial image, such as:
The plaintiff's actual used trademarks are as follows:
In addition, the defendants marketed their copycat brand
"DBOWLING/DHENJULA" as "Champion,"
"Bowling Champion," and "Double Bowling
Champion," attempting to create confusion with the
plaintiff's Champion brand.
In practice, the defendants' strategy caused significant
consumer confusion. Many consumers complained online and on mobile
media platforms about the copycat brand's
"fraudulent" behavior, noting that they were refused
refunds after being deceived.
Since 2019, the plaintiff has entrusted Chang Tsi & Partners to file invalidations, non-use cancellations, and oppositions against the counterfeit trademarks registered by the defendants. ChangTsi's team has been closely monitoring and investigating the defendants' infringement activities, with evidence preservation efforts starting in early 2020. By the end of 2022, through judicial review of invalidations, the defendants' pirated trademark was declared invalid. However, the defendants acquired another pirated trademark through assignment and continued their infringement pattern. The plaintiff took action against this new pirated trademark as well.
Pirated trademarks are crucial tools for infringers. Without them, infringers cannot conduct commercial activities like investment and franchising, nor can they expand the scope of infringement for large-scale profits. Therefore, timely action against pirated trademarks is essential.
In September 2023, the plaintiff filed a civil lawsuit against the defendants for trademark infringement and unfair competition in the Chaoyang District People's Court of Beijing, seeking compensation of 10 million RMB for damages of infringement and 500,000 RMB for reasonable expenses. The court fully supported the plaintiff's claims in the first instance.
Challenges and Key Issues in the Case
1. Holding the Core Controllers Responsible
During monitoring and investigation, it was discovered that the companies involved were shell companies established solely for infringement. The infringers did not leave profits in these companies' accounts for rights holders to claim. Identifying and holding the core controllers accountable became crucial.
Through meticulous investigation, evidence showed that the core controller (the wife of the boss) received the infringing profits. A lawsuit was filed against them, and their assets were preserved. The evidence demonstrated that the legal representatives, shareholders, and executives were relatives, forming a family-controlled infringement group with joint infringement. The court accepted this evidence, recognizing all entities, including core controllers, as jointly liable. This recognition was crucial for the actual enforcement of the compensation.
2. Calculation of Compensation Amount
The compensation amount relates to the scope and scale of infringement. Since the plaintiff's claim exceeded the maximum statutory amount and included punitive damages, evidence was needed of the plaintiff's losses or defendants' profits.
The plaintiff provided evidence showing the defendants' clear intent to infringe, demonstrated by their long-term trademark squatting, misleading promotions, large-scale infringement, and replication of infringement even after being targeted. The court applied double punitive damages.
Significance
This case exemplifies successfully combating copycat trademark infringement and unfair competition. The court supported the plaintiff's claim for compensation, including double punitive damages, and endorsed the plaintiff's strategic approach. By identifying core controllers and preserving their assets, the plaintiff persuaded the court to hold them jointly liable. This approach effectively curbs infringement at its root, ensuring responsibilities are enforced in practice. The court's judgment bolsters foreign brand owners' confidence in protecting their intellectual property rights in China, fostering a favorable business environment.
(Note: The case is currently in the second instance procedure.)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
